Where to Find the Shareholder Basis Worksheet in Drake Tax
The Shareholder Adjusted Basis Worksheet is reached from screen K1E using the Basis Wks tab at the top of the screen. On a 1065 the equivalent is the Partner Adjusted Basis Worksheet. The entity level worksheet is an estimate: inside basis is computed at the entity, outside basis at the owner level, and the final limitations are applied on the individual return.
- Data entry
- Screen K1E
- Basis Wks tab
| Trial balance account | Drake Tax screen and field | Lands on |
|---|---|---|
| Shareholder basis worksheet | Screen K1E, Basis Wks tab | Entity level estimate of stock and debt basis |
| Partner basis worksheet | The partner K1 screen basis worksheet | Entity level estimate of outside basis |
| Shareholder loans | Due to shareholder on screen L | Debt basis, and Schedule L line 19 |
| Distributions | Screen DIST | Reduces stock basis |
| Nondeductible expenses | Screen K | Reduces basis and AAA |
| Form 7203 at the 1040 level | The shareholder individual return | Where the limits actually apply |
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Try it freeWhere to Find the Shareholder Basis Worksheet in Drake Tax on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder (the account this page is about) | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Cash | 15,000.00 | |
| Due to shareholder | 15,000.00 |
| Account | Debit | Credit |
|---|---|---|
| Due to shareholder | 5,000.00 | |
| Cash | 5,000.00 |
Inside basis and outside basis are different numbers
This is the point of the Drake note that the entity worksheet is an estimate. Inside basis is calculated at the S corporation level. Outside basis, the number that actually limits a shareholder's losses and decides whether a distribution is taxable, is calculated at the shareholder level.
So the worksheet in the 1120-S is a view of how basis may compute at the individual level. The final calculations and limitations are applied on the 1040, and the Schedule K-1 the shareholder receives is not limited at all and can show negative amounts.
That has a practical consequence on review. A K-1 showing a loss larger than the shareholder's basis is not a software error; it is the entity reporting its allocation and leaving the limitation to the owner's return.
Where to find it
Screen K1E, then the Basis Wks tab at the top of the screen. The 1065 has the partner equivalent on the partner K1 screen.
Use it to compute a shareholder's new basis after the year's increases and decreases. S corporation stock basis moves every year, unlike C corporation stock basis, which stays constant unless capital is contributed.
Form 7203 lives on the other return
Form 7203 is the shareholder's form, filed with their 1040, and Drake produces an EF message at the individual level when a required basis computation is missing.
For the entity preparer, the useful posture is to produce the entity estimate anyway, especially when losses or distributions are large. If stock basis is likely exhausted, the shareholder needs to know before they file, not after.
The three balance sheet accounts that drive it
Loans from the shareholder. Direct shareholder debt creates debt basis that can absorb losses after stock basis is gone. A bank loan the shareholder merely guaranteed does not, because a guarantee is not an economic outlay.
Capital contributions. Increase stock basis, and are frequently miscoded as revenue or as a loan.
Distributions. Reduce stock basis, and are tax free only to the extent of it.
Each of those is an account on the trial balance, and each is commonly wrong in client books. The basis computation inherits whatever the balance sheet says.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120S | Basis worksheet in the return, with loans on Schedule L line 19 |
| Form 7203 | Filed with the shareholder 1040, where the limits apply |
| Form 1065 | Partner basis worksheet, with liabilities in item K of the K-1 |
Common questions
Where is the shareholder basis worksheet in Drake Tax?
On screen K1E, via the Basis Wks tab at the top of the screen. The 1065 equivalent is the partner adjusted basis worksheet on the partner K1 screen.
Why does the 1120-S basis worksheet differ from the shareholder Form 7203?
Because inside basis is computed at the entity level and outside basis at the shareholder level. The entity worksheet is an estimate; the final calculations and limitations are applied on the individual return, and the K-1 itself is not limited and can show negative amounts.
Does a shareholder guarantee of a bank loan create basis?
No. A guarantee is not an economic outlay, so it does not create debt basis. A direct loan from the shareholder to the corporation does, and it appears on Schedule L as a loan from shareholders.
What reduces S corporation stock basis?
Losses, deductions, nondeductible expenses and distributions. Contributions and income increase it. Unlike C corporation stock basis, which stays constant unless capital is contributed, S corporation basis moves every year, which is why it has to be tracked rather than reconstructed later.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 18, 2026.